Protesters carry banners and signs during an anti-Philippines protest march in solidarity with Taiwan near the Philippine consulate in Hong Kong Tuesday. Taiwan has issued an ultimatum to the Philippines to make an official apology to the family of a Taiwanese fisherman who died in a fatal shooting by the Philippine Coast Guard in waters off the northern Philippines or pay a price.

Taiwan and the Philippines have stepped into a rare diplomatic showdown this week, jeopardizing a mutually beneficial migrant labor relationship and a Pacific Rim alliance.

Taipei gave Manila through Tuesday to apologize publicly for the death of a seaman, plus offer compensation, after saying Philippine authorities had shot and killed the 65-year-old man on a boat in overlapping ocean economic zones.

Manila expressed private condolences to the deceased’s family, acknowledged that its coast guard fired on the boat Thursday, and said it would investigate the incident. Taipei says that’s not enough, but it’s unlikely to get a formal apology from the Philippines because that would imply that Taiwan controlled the Luzon Strait area that is fished by both sides.

The fray shows that leaders in both places face domestic pressure to appear strong – analysts say so much pressure that they are willing to risk long-standing benefits.

But, says Liu Yi-jiun, public affairs professor with Fo Guang University in Taiwan, “This is a lose-lose situation, no doubt about it.”

Taiwan says that it will consider recalling its de facto ambassador, expel the top Philippine diplomat in Taipei, and suspend migrant labor contracts. It might even follow up with a military exercise in waters where the fisherman was shot.

Taiwan’s suspension of migrant labor from the Philippines would diminish the confidence of dozens of local factory owners who have returned from China expecting to save costs at home. About 88,000 Filipino migrants now work in Taiwan, and the island’s labor department relaxed rules in March to make contracts easier.

And it wouldn’t go over well in the Philippines, either: Migrants earn less on average than Taiwanese workers but more than they would at home. They often send wages back to family, and in 2011, overseas labor remittances made up 9 percent of the Philippine GDP.

Appearing strong

Filipinos went to the polls on Monday to elect 241 members of parliament, making any apology even more remote as President Benigno Aquino III’s party sought to appear strong. Mr. Aquino is seen as tougher on foreign policy than his predecessors. Local media said Tuesday his coalition had won parliament.

In Taiwan, President Ma Ying-jeou’s approval ratings hit a low of 13 percent in January, a local television network poll found. He has been criticized as weak on foreign policy while Taiwan’s longtime political rival China gains clout worldwide with its massive economy.

But continued tension with the Philippines, which is just 250 kilometers (160 miles) to the south, could weaken Taiwan’s status as part of a loose alliance of US Pacific Rim allies that includes Washington’s arch-supporter Manila, some analysts say.

Factoring in China

That’s because China, the would-be target of a US alliance, is extending help to Taiwan. Beijing’s agency in charge of Taiwan affairs called the fisherman’s death “barbaric,” China’s official Xinhua News said last week.

“Filipinos will see giving in to Taipei as giving in to Beijing,” says Sean King, senior vice president with the political consulting firm Park Strategies in New York.

“Taiwan finds itself potentially cross-wise with a US treaty ally at the same time that it is being actively courted by Beijing,” says Scott Harold, associate political scientist with the RAND Corp. think tank. “This is in fact a far greater threat to Taipei than any dispute with Manila over fishing rights could ever possibly be.”